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Federal Unemployment Tax Act (FUTA)

FUTA is a joint federal-state government program to provide cash benefits to employees during temporary periods of unemployment. The benefits are funded by a tax (denominated a "contribution") measured by wages an employer pays.

Annual and multi-employer limits

FUTA is subject to annual caps for wages received from the same employer, or in some circumstances, successors. When 2 or more related corporations concurrently employ the same individual during a calendar quarter and compensate that individual through a "common paymaster" which is one of the employing corporations, each corporation is considered to have paid only the remuneration actually paid by it to the employee, but the total amount of the employee and employer tax is determined as though the individual had only 1 employer. § § 3121(s) and 3306(p); Regs. § § 31.3121(s)-1(a) and 31.3306(p)-1(a)